Washington, DC-Good Jobs First executive director Greg LeRoy today commented favorably on bills that have been introduced in several states to create a "Phase Out Corporate Giveaways Interstate Compact." The bills were originated by Chicago-based lobbyist Dan Johnson.
"Amazon's cynical HQ2 competition, a tax-break auction rare for being conducted in public, exposed the USA's historically secretive Tax Break-Industrial Complex. Millions of Americans, including the sponsors of these new bills, are rightly outraged, demanding an end to America's ruinous 'economic war among the states.'
"We laud Johnson and the state legislator sponsors for moving to channel this outrage into positive solutions. Given our constitutional federalism, we agree that states need to create new formal structures to cooperate. As I summarized the status quo in my 2005 book: We are suffering 'the legacy of a 50-year campaign by corporations to divide and conquer the states - as well as the suburbs - preaching a gospel that governments at all levels must never be allowed to cooperate.'
"So we welcome these new bills as timely vehicles to start promoting that necessary interstate dialog.
"The bills suggest states begin by focusing on an especially outrageous aspect of the problem - interstate job piracy. As we documented in our 2013 study The Job-Creation Shell Game, this problem is especially acute in metro areas that include parts of two or more states.
"We at Good Jobs First have been advocating for solutions to this race to the bottom since our founding in 1998 and detailed the 80-year history of how corporate interests came to dominate the economic development debate in our 2005 book, The Great American Jobs Scam. We issued our most recent policy menu a year ago at Ending the Economic War Among the States. It includes remedies to end 'megadeals' even for retention, for example, by denying subsidies to large companies and by capping subsidies on a per-project, per-job and per-company basis.
"As we argue in that paper, the federal government also has a critical role to play in moving state progress here. For example, most recently, Uncle Sam successfully used the 2009 American Recovery and Reinvestment Act as a 'carrot' to incentivize many states to modernize their Unemployment Insurance systems.
"Finally, we continue to urge U.S. policy makers to learn from the state aid system of the European Union, where member nations have a higher degree of rational, cost-effective cooperation on incentives than do the United States of America. See our latest 'Lessons for the U.S.: How the EU Controls Bidding Wars for Jobs and Investment.'
"We look forward to working with the bills' sponsors and everyone else seeking to reform economic development."
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